A Sharing Economy Star Shuts Down as Labor Issues Simmer

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A Sharing Economy Star Shuts Down as Labor Issues Simmer

'His and hers' washing up gloves

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Uber is fighting back against legal claims hurled in recent months that its drivers are wrongly classified as contractors instead of employees. But for Homejoy, an app-based on-demand home cleaning startup that was targeted by similar lawsuits, the fight is over.

In a blog post, today, Homejoy CEO Adora Cheung announced that the company would be shutting down for good at the end of this month, citing, the "many unresolved challenges in the home services space." While Cheung didn't specify the exact challenges she meant, it's not hard to see how the growing discord in both Silicon Valley and in Washington over protections for workers in the so-called gig economy might have played a role.

An extensive story in The Washington Post last year made Homejoy the poster child for the many thorny issues associated with the gig economy, where workers lack basic benefits; employers advertise theoretical salaries that few ever end up earning; and customers can cancel jobs at a moment's notice with the click of a button.

As is so often the case for startups, money was also a problem. Homejoy raised $38 million back in 2013 but charged prices so low for its services that it likely burned through that funding. A spokesman for rival cleaning service, Handy, confirmed to WIRED that it was in talks to acquire Homejoy. That deal seems to have fallen through, leaving a cashless Homejoy to compete with its much larger rival. Now, Handy is offering up $1,000 bonuses to Homejoy workers who join Handy.

In an interview with Recode, Cheung said that the lawsuits were simply a matter of bad timing. And yet, as the gig economy becomes a favorite talking point in early presidential campaign stops—Hillary Clinton promising to crack down on the misclassification of workers; Jeb Bush riding shotty in Ubers like he's the Fresh Prince of Bel-Air—it seems reasonable to assume that these issues will only get messier.